Kiwibank fuels expansion for sustainable cereal company.

In the last nine years, Scotty Baragwanath has gone from making cereals in his kitchen to having 1.5 million premium breakfast products a year in homes across New Zealand and Australia after being stocked in nearly 2000 supermarkets.

When he looks back over that journey, there are a couple of moments that stand out as being pivotal to the success of his company, Blue Frog Breakfast. One was developing its hero product, Macadamia, Almond and Manuka Honey cereal, in 2019. Another was getting capital in 2020 from Kiwibank to buy new equipment that meant the business could massively increase output.

“The investment from Kiwibank enabled us to buy a much larger automatic filler [machine] so we could go from around 2000 bags per shift to 15,000,” says Baragwanath. “That was instrumental in us growing and not only being able to source new markets in Australia but servicing them. It was an absolute game-changer.”

The bank’s Head of Sustainable Finance, Tom Williams, says Kiwibank is drawn to businesses like Blue Frog that are excited about bringing their products to the world: “We love a passionate [company] founder, and you only need to spend 30 seconds with Scotty to see he ticks that box.

“He had a clear vision for producing a premium quality product – their cereals are really, really good – and an understanding of how sustainability would be part of that. We love working with people like that, helping them to achieve success.”

Baragwanath is a passionate foodie, trained in food technology before beginning a career in product design and innovation with food manufacturer Mars. In 2015, after spotting a gap in the market for cereals that not only tasted great but were nutritious, he left his corporate job to make the kind of food he wanted to eat first thing in the morning.

“I went in boots and all,” says the Auckland-based entrepreneur. “There was no plan B.” He created recipes in his kitchen which he then tried out on his four children, friends and neighbours. To start with, he sold his products at weekend markets before getting them on the shelves at urban grocery chain Farro and later other shops. For 18 months he was the sole staff member at Blue Frog, putting in 100-hour weeks.

The hard slog was worth it. Today Blue Frog sells 16 products in over 350 stores in New Zealand and almost 1400 in Australia. It is New Zealand’s most awarded breakfast cereal producer, having picked up a slew of top prizes at the likes of the Food Producer Awards and the New Zealand Food Awards.

Now its rapid growth is continuing with plans to be stocked by retail giant CostCo, with Kiwibank a crucial part of getting to where they are today – and planning for the future. The New Zealand-owned bank came on board back in 2020, not long after Blue Frog had launched in Australia.

“With the growth we were experiencing, we needed to find a bank lending partner,” recalls Baragwanath. “We spoke to all the main banks but, from the first conversation we had with Kiwibank, it was clear they shared a lot of the same business values that we did. They dug a lot deeper, genuinely looking into what we were trying to do.”

One of the attractions of working with Kiwibank, on top of the capital they could provide to support growth, was the fact that, like Blue Frog, they are B Corp certified. This is a designation given to companies that meet high standards of social and environmental performance, transparency and accountability. Rather than focusing solely on making maximum profit, B Corp businesses consider the impact of their operations on their workers, customers, suppliers, community and environment.

Baragwanath says sustainability is important to Blue Frog, the first breakfast food company to be B Corp certified in the Asia Pacific region. It is also certified as carbon positive by Ekos, which means it has measured and offset 120 per cent of its carbon footprint. The plastic bags that contain the cereal Blue Frog produces – around 1.5m each year – are made of 44 per cent recycled milk bottles.

“We have always said that, if we are going to be making a product to scale, we are going to look at the impact that has and make sure we are being a force for good, not only environmentally, but when it comes to how we work with our staff, and how we work in our local community. The fact Kiwibank shares those values is very important.”

Kiwibank tailored its banking services to meet Blue Frog’s needs as the company has grown, including offering access to sustainable finance benefits. Expertise shared by commercial manager Mike Mangino, who has built a strong one-on-one relationship with Baragwanath, has been vital.

As well as recommendations like suggesting Blue Frog made changes to shore up their core New Zealand business operations before exploring new overseas market opportunities, Mangino’s knowledge about how similar companies operate has also been extremely helpful.

“Mike will come and have a coffee and catch up on what’s happening, and a lot of the conversation is him sharing perspectives on other businesses he is working with,” says Baragwanath. “There are a lot of learnings in common and he has so many ideas that are really useful. It’s a partnership in the true sense of the word.”

Building strong relationships is an essential part of the way Kiwibank operates, says the bank’s Head of Sustainable Finance, Tom Williams.

“What we’ve done for Blue Frog, aside from the everyday banking services, is establish a relationship that provides connections to networks and other support,” says Williams. “Mike’s been on a lot of this journey with Scotty and he’s there as much as an adviser as someone who says, ‘Here’s a new bank card’.

“He’s played a key role in helping Blue Frog to make pragmatic and practical decisions throughout their growth, including helping with the capital that allowed them to increase production.”

Williams points out that Kiwibank is able to help companies of any size, at any point in their journey: “We can match the right tools and people to their business, wherever they are at. Our job is to make banking services easily accessible and, in cases where there are more complicated needs, we can customise our services.”

Kiwibank is keen to support a range of New Zealand businesses, from manufacturing and transport to construction and health and, while being B Corp certified isn’t essential, Williams says it helps if companies have an understanding of sustainable practices and plans relevant to their business.

“That shows they will have a more resilient business model,” says Williams, “and today, if you are looking to trade in international markets, sustainability is crucial to get that access.”

Watch the full episode in Kiwibank’s series, Business for Better, and learn more about how Blue Frog Breakfast are leading the way in how they do business for better kiwibank.co.nz/businessforbetter

This article was proudly brought to you by Kiwibank, who believe sustainability and profitability go hand-in-hand when creating a future proof business. That’s why Kiwibank support Kiwi businesses making a positive impact on the environment, their customers and their employees. This is business banking for better #ThisisKiwi.